Turning Local Storage Auctions into Cash

Turning local storage auctions into a side income for yourself or your family really boils down to patience and discipline. It’s not going to be every time you buy a large or small storage shed that you’re going to find hidden jewels and secret caches of wealth beyond your wildest imaginings. However, if you apply some determination and have a system in place for processing all the worthwhile goods you obtain from a storage auction you won, you will be able to ensure steady income.

Advantage eBay

I have been a vocal proponent of selling your storage wares on eBay. I am very pro-eBay for two important reasons. Number one, it has worked for me and I have made extra money for myself whenever I was in a pinch. I know it is effective. Number 2, selling your items on eBay essentially boosts their value to their buyer, while simultaneously getting your wares out in front of a much larger audience than you could ever hope to obtain locally or through yard sales and swap meets.

How does selling your storage goods on eBay increase their value to the buyer? Basically, by listing your items for sale on eBay, you are leveraging the same psychological force that helped you to win them in the first place! Imagine if you had a full set of croquet equipment that you found in the back corner of an auctioned-off storage shed. If you set this odd item out on your lawn, the handful of people that actually turn up to your sale might give it a passing glance or more. One person might even be halfway interested in them. How much bargaining power do you think you have with this one half-interested person, of a finite number of people that can see your croquet set, versus the thousands upon thousands of people that might view your croquet set on eBay in a given week?

The Value of Motivated Buyers

Not to mention, the people on eBay that see your croquet set actually already want one, because they’ve had to type “croquet set” into the search bar just to get to your item. You already have a much larger pool of directly interested buyers that are just about to pull the trigger on a sale. Not to mention they will be competitively bidding with one another, driving your profits up with each fresh bid.

Not many yard sales have that kind of consumer psychology behind them, unless you get proactive and spike the lemonade.

Getting Out What You Put In

The other thing that becomes essential when you’re focusing your energies on turning local storage auctions into cash is persistence. Sometimes there will be several storage sales in a row, and then you should focus on buying up as many worthwhile sheds as you can. Sometimes there will be a local drought of storage auctions and then you should stay home and process your wares, polishing up the tarnished ones, repairing the broken ones, appraising the shiny ones, and then listing them all on eBay with unyielding ferocity.

The point is that you’re running your own business now. Only you profit when the business succeeds. And only you fail or lose money when the sales slump. You get to write your own destiny and it’s all determined by how methodical you are willing to get about obtaining bulk goods at deeply discounted prices, and strategically reselling them for profit.

Enlisting Trusted Compatriots

If you have family members or close friends that want to work alongside you and contribute to the cause, all the better. Because this business model is so simple, it scales pretty well, meaning that you basically do the same thing when you have 20 workers as you do when you only have 2, you just do it to a power of 10. If you have a whole basement’s worth of motivated workers, you can send one or two crews out to buy up the auctions, keep one squad on the computers and phones pricing items and labeling them for the listers, and keep one group on the fastest computers for non-stop eBay listing action. Then you just need a shipping department to box and ship the goods and you’ve got yourself a full-scale operation.

To increase your chances of having a positive and successful experience, make sure you only work with people you can trust and be sure to outline the terms of payment very clearly before you ever go in on buying your first joint storage shed.

Assuming a reasonably harmonious work environment, you and your family can build up a successful and lucrative family business that you can run out of your home or basement. If you and a buddy or two are out of work, you can try your hands at the storage auction resale game and see if you have the dedication it takes to turn a steady profit.

Storage Auctions Are Open to the Public!

Many newcomers to the storage auction scene are hesitant at first. How do you get into a storage locker sale? What do you have to do to be eligible? What if I mess it up!? Relax! Storage auctions are open to the public and you do not have to pre-register. You just show up on the given date (preferably at least 10-15 minutes before the sale begins) and all the instructions and rules you need to know should be outlined by either the property manager or the auctioneer before the event begins.

Keep in mind, most self storage companies will have you read and sign off on either a sheet of auction rules, or a bidder registration form, or both. The most important of these is the bidder registration form, because the company or the auctioneer will use it in order to get in touch with you if you’ve won a storage unit or if you had to run across the street to the ATM after a sale. They mostly keep your contact info in case they lose track of you but need to get your payment so they can go home and you can start loading your winnings into your vehicle.

But, in general, storage auctions are simple, easy and pretty much low key. Anyone and everyone is welcome to attend them (assuming you haven’t already pissed off the facility’s management to such a degree that they had you barred you from all future auctions). Attending your local self storage facility’s sell-off really isn’t too frightening nor difficult.

Remember, by the time that a storage company hosts an auction that’s open to the public, they’ve already lost plenty of money on their habitually late paying tenants. They don’t really care who shows up so long as they’ve got cash! They want to get the best possible prices for the storage sheds being sold, which means they want to get the most possible bidders onto the property. The more interested bidders you have, on average, the higher the final resting prices for the storage sheds being sold off.

So stop worrying about red tape that doesn’t exist and pop down to your local storage facility the next time they have a sale. It doesn’t matter if you are hell-bent on buying up a locker or if you simply want to see the spectacle and get a feel for the process – it’s ok to come by and observe the auction.

The Best Score I’ve Seen at a Storage Auction

This question comes up pretty frequently: what’s the biggest score you’ve ever seen at a storage sale? It’s difficult to figure exactly which of the scores have been the best – I don’t follow the winners home and ask them how much profit they’ve made after a month. However, the one that always sticks in my mind happened right here in Kailua-Kona, Hawaii, when a full-time air conditioning expert came on his day off to buy up a 10×15 unit.

It was the only one that has seemed promising when we were processing the delinquent sheds for auction that month. Whereas the rest were all smaller and mostly full of musty clothes and junk, this one had a safe in it! In addition, there were several expensive electronics, a few home entertainment systems, video games and assorted sealed up boxes. Basically an entire family’s worth of luxury items.

When the winner started claiming his goods, he immediately found two electric specialty power saws that were worth about $200 each. Considering he had just bought the entire unit for $350, he had already made back his money and then some!

I did happen to catch up with him later, when he told me that the ultimate score had come in the form of a small box of jewelry he found inside one of the filing cabinets hanging out in the back of the unit. The total value of the gold rings and bracelets was $1200 and they had sold fast, he told me.

Now, granted this guy had already had a good deal of experience buying up delinquent storage sheds, but he had also been on a nice streak of good luck in the past few weeks, earning, all told, $17K of just profits, even after accounting for all the gas, storage fees, listing and auction fees on eBay, etc.

Reader Question: Are Storage Auctions For Real?

Today’s reader question, from Samantha, baffled me at first, until I started poking around and found out that she’s not the only one wondering if storage auctions are actually real! Of course, this seems curious to me, having prepared and run storage auctions myself, but I realized that many folks who normally would never have anything to do with self-storage in the first place have started visiting properties and learning the lingo solely because of their money-making interests in delinquent locker sales. This got me wondering exactly how many people are on the fence about public storage auctions in general and how many folks aren’t sure if this whole thing is just an elaborate scam or actually a way to earn a decent side income. Let’s hear Samantha’s take first:

[quote] Aloha! I have been reading on your site for a while now and I saw some parts of Storage Wars the last time it was on TV. I have never used a storage locker before and I don’t think I’ve even been to a facility. What I want to know is if these storage shed sales are real or if they are just made up like some reality shows. Also, if they are real can anyone come to them or do you have to have a license? Thanks! [/quote]

Thanks for your question, Samantha. I think there are two things going on here that we should disentangle first. First, you are asking about storage units, the lien laws, and delinquent locker sales, and second you are wondering about the popular storage auction television shows like Auction Kings and Storage Wars. Let’s start with the first part.

Yes, storage unit auctions are entirely real, legit and semi-regular. They occur because sometimes a tenant will move into a new unit, fail to pay their monthly rent on time, not be in contact with the property manager, and eventually fail to answer or show up at all. Meanwhile, the company is still out the space they rented to this person because they cannot take on a new paying customer in that same spot – the delinquent tenant has their lock on the unit and is basically getting the service for free because they won’t pay.

It might not seem like a big deal to have a few tenants that don’t pay on time or who are actually several months behind on their rent payments, but in fact this is quite damaging to the storage company, which relies on timely monthly payments to pay for their own, often considerable monthly expenses. Depending on the ownership status of a given property, a self storage company may need to pay a costly mortgage, as well as steep utilities (think $100 a day for electricity in some states), commercial insurance, rental truck costs, salaries, benefits, maintenance and upkeep fees and advertising expenses to name a few.

Essentially what this means is that when a tenant fails to pay their rent for several months in a row they are actually causing financial damage to the company. In order to protect self storage companies from these damages, the state lien laws provide the companies with a means of seeking reparations by first denying the tenant access to their belongings, so as to encourage them to pay, then by repossessing the delinquent locker in its entirety, and ultimately by selling its contents at a public auction in order to make up some of the money they are owed.

So yes, to answer the first part of your question, storage auctions are very real. They happen quite frequently throughout the many states where self storage facilities are operating.

Now, to address the second part of your question, I think what is confusing to many of you that have never attended a real public storage sale is whether or not the reality shows like Storage Wars and auction kings portray the process accurately. Are public storage sales going to enable you to browse oceanfront mansions for sale in mexico? The answer to this question is yes and no. They do show the basics of an auction, the arrivals, the preparations, the crowd of bidders gathering, the manager opening up the door for the bidders’ brief inspections, and the intensive bidding action, correctly. This is pretty much how it goes down at any given public auction.

What doesn’t necessarily happen at any given storage auction is some of the great scores and big finds they record on these shows. For example, you’re not going to find a vintage coca-cola glass bottle vending machine worth $40,000 in every 10×20 you buy, though the frequency of the big scores on these shows might lead you to believe otherwise.  There are a few good reasons for this. Number one, the shows need to be entertaining in order to be successful. Therefore they lump together all the biggest scores to make their episodes more exciting. The shows’ creators have stated that they film many, many more auctions than they include in their final cuts. You can be sure that they are leaving some of the more trashy and less valuable auction units out of the series.

Now there’s another major way that the shows omit something that can and does happen at un-filmed sales. You can someday expect to find the actual owner of the storage unit at the auction, trying to get back their belongings by re-buying them! Sometimes this goes smoothly, either with the tenant winning their things back and leaving happy or with the tenant simply going quietly after they watch someone else outbid them for their own things! Sometimes it’s less than pleasant, and you can imagine the arguments that arise when a delinquent tenant starts hassling the strangers trying to buy his things. Now, the shows’ producers have stated in interviews that they avoid this kind of drama like the plague. If something unpleasant like this goes down during a sale, they simply stop filming and move on down the line to the next storage shed on the chopping block.

Some of the television shows’ embellishments are more self-evident. No, you do not typically see people wearing night vision goggles to peer into the dark units. No, you do not typically see midgets standing on their buddy’s shoulders to get a better view. No, couples don’t typically hold public arguments on whether or not the male half should still be bidding on units due to his inveterate gambling problem. This is the typical trumped-up fare of “reality” TV. It is designed to titillate the viewers at home so they will stay tuned.

My personal 2 cents is that the shows are primarily designed to be pieces of entertainment. You can take them or leave them as you like. The real business of buying up delinquent storage sheds and flipping their contents for profit remains what it always has been, a good way for a dedicated person to make some extra cash on the side, and possibly get lucky from time to time by landing a big score.

Storage Auction Pitfalls

In keeping with our tradition of transparency and forthrightness, today we’re going to highlight some of the less desirable aspects of storage auctions, thereby empowering you, the reader, to make your own judgment calls regarding whether or not attending storage auctions is a good way for you to make extra cash. While the reality shows Storage Wars and Auction Kings initially created a furor around the little town I live in, and had random people calling us up throughout the day just asking when our next auction was, I have also encountered a few folks that don’t share this enthusiasm as it pertains to dropping potentially a few hundred bucks on a stranger’s stuff.

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Reader Question : Shady Managers

On Storage Auctions Kings, we always do our best to respond quickly to reader’s questions sent to us via the Ask form. Today’s reader question comes from Peter,  who has witnessed some pretty disturbing behavior going on around his local storage property. When it comes to auctions, greed is the ultimate motivator, but you never expect it to be coming from the storage managers! What can you do if you suspect the management of unsavory acts when they are approaching an auction day? Is there any possible recourse to stop managers from stealing from delinquent units before the actual auction day? Peter asks:
[quote]What can you do if you think the storage auction manager or staff is going through the lockers before they are auctioned off.  There has been a number of time where the buyers feel the manager or staff of the auction have gone through certain lockers before they are auctioned off and taken items of value from them.  Example is that one storage manager was seen at the swap meet selling high end guitars and other valuable merchandise that could only have been from a storage locker. There are other examnples but wanted to get your thoughts.
[/quote]

Excellent question, Peter. Unfortunately, it sounds like there are a number of things terribly wrong with this picture. For one thing, managers going through auction units is a huge no-no. If they are in fact going through the units and helping themselves to what they like they are opening themselves up to criminal charges. The lien laws are in place to ensure an orderly and rightful sale of the goods inside a delinquent unit by the company (not individuals) in order to defray the company’s damages caused by non-payment.

Not to mention it’s extremely unprofessional, damages the reputation of the entire facility and will only hurt business and auction turn outs in the long run.

If you have a strong suspicion this is going on, you do have potent recourse. One thing you may need only to threaten is to notify the owner of said storage facility. Most of the time, the property manager is an employee that works there at the will of the company, which may either own or manage the facility. Alternatively, a single person or group of people who’ve invested in the property may own it. If the property manager does not happen to be the owner, you can bet they will be terminated right quick when they fail to provide the proper documentation and proof that they were following the correct procedures for pre-processing an auction unit.

Unfortunately, most companies do require their facility managers to open up the units that are going to be sold once the company has fully repossessed them. Usually, a property manager will go with another manager or an assistant, who is basically serving as a witness, and take pictures of themselves opening the unit, documenting its contents simply by looking inside and describing the items generally, and then closing the unit and locking it with a company overlock. Usually the manager will also install an auction tag on the door at this point.

An auction tag is a clip-on badge with a unique serial number printed on it. Once installed on the storage unit door, this tag can only be opened by being snapped off and broken. The manager will now take a picture of this tag and the serial number. This provides yet another layer of protection against liability, for both the manager and the company, because this tag will not be broken until auction day when all the bidders are standing outside it, thereby proving the unit has not been tampered with since it was pre-processed.

The company, as well as the owner, if they are different, would be very interested to know if these procedures aren’t being followed correctly. Even if the shady managers are simply helping themselves before they pre-process the unit, the very fact that they’re being questioned about it by their upper management would probably scare them straight.

You could always call up asking to know the contact info for the owner because you have a unique advertising opportunity for them! (You didn’t hear this from me).

If you want to be even more low key about it you could always ask the storage manager where they got their fancy new items. When they tell you whatever lame lie they come up with, just say outloud, “that’s funny, because I could have sworn that looks exactly like the one my buddy was storing in his unit before you guys sent him to auction!”

Thanks for your question, Peter. Keep the questions coming, folks!

[author] [author_image timthumb=’on’]http://www.storageauctionskings.com/wp-content/uploads/2011/04/zackbiopic.png[/author_image] [author_info]My name is Zack Proser. I created this site to share the insights I’ve gained from working as a property manager, processing units for auction and conducting the sales on auction day. I also use this site to share my experiences on a diverse array of topics pertaining to the self storage industry, working as a property manager, storage unit auctions tips and using local storage auctions as a resource for supplemental income.[/author_info] [/author]

The Number One Way A Property Manager Botches a Storage Auction

[dropcap style=”font-size: 60px; color: #C93113;”] M [/dropcap]any storage customers approach me asking about how they can prevent their unit from going to auction when they’re in dire financial straits and getting down to the wire. As I always let them know, there are a good number of “best-practices” you can put into effect at the first signs of trouble. The first time you have a hard time making your monthly storage rent, you need to consider the following options seriously:

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